It’s been almost a year since the novel coronavirus pandemic forced bars, restaurants and other small businesses to pivot and create new processes for a very different world. And according to the National Restaurants Association, in October of 2020, restaurants across the country reported a 36% drop in revenue year-over-year.
With many changes came a large uptick in the use of delivery and pick-up apps like GrubHub, Toast and others. Some of these apps promised bar and restaurant owners higher visibility for their local audience, new in-store customers and sales growth.
While these apps offer added visibility and purchasing options for restaurants, those opportunities come at a cost.
For Matthew McWeeney, wine buyer at a liquor and bottle shop in Somerville, Massachusetts, Drizly’s fees make the app’s benefits tough to swallow.
“In my opinion, the fees are simply not worth it,” he says, adding that the tiered fee structure means the app takes about 15% of his sales, comprising a few hundred dollars a month. “From the shop’s perspective, we’re responsible for processing, packing and delivering orders on a reduced margin. Customers are then paying a significant premium to have wine, beer or spirits packed and delivered to their door.”
Consumers often think service fees are a business’ way of adding a mandatory tip to support employees during difficult times, so they choose not to leave a gratuity. But what customers often don’t know is that service fee goes to Drizly or similar apps.
“We may be making some sales we otherwise wouldn’t have, but this comes at a cost to our staff, margins and time,” says McWeeney.
While apps offer added visibility and purchasing options, those opportunities come at a cost.
Apps like DoorDash, GrubHub and UberEats require consumers and restaurants to pay considerable fees. For instance, restaurants and bars pay up to 30% in fees while consumers can expect between 4–91% fee hikes.
Many states are responding by limiting fees during the pandemic to 10–15%, but apps like UberEats and DoorDash have gotten around this legislation by adding specific city fees to customers in places like Jersey City, Chicago, Denver and beyond.
Fortunately, alternatives exist. Haley Fortier, owner and operator of Boston wine bar nathálie, uses a point-of-sale [POS] system, Toast, that allows businesses to set their own pick-up and delivery services.
“It has the ability to do everything I need it to do, without getting involved in any other service for ordering online, paying any additional costs to what we already pay and having to set a new system in place while we are temporarily closed,” Fortier says.
Toast partners with DoorDash for delivery, adding an additional minimum of a $7.50 fee per delivery order.
Other bar owners are getting creative and using their restaurant backend systems for ordering, figuring out their own delivery schedules and drivers and hoping that their customer base will follow along.
“Upserve is our backend for how we process our payments and the app we use at Hunt. We are doing delivery ourselves because honestly every app we have looked into is either so predatory in their fees or they are too much of a pain to deal with. Doing it in-house has been really nice and easy. It has made it possible to retain some more of our staff since we aren’t open indoors or outdoors right now. All the fees we charge go to them too!”
Still, many business owners maintain that whether you’re ordering from a bar, a restaurant or a bottle shop, the best way to support it is to pick up the phone and order from them directly.
“I wish consumers knew how much these services take from restaurants in fees that generally leave the restaurant at a loss in many cases,” Volk says. She encourages people to call their favorite spots to ask if they deliver, or order food and drinks for pick up. “More money then goes to the places you love. Also, tip really well, even on to-go and delivery!”